My Transition to a Direct-pay Practice

If you ask a hundred physicians if they are happy with our current healthcare system, you'd be hard-pressed to get one to say "yes." If those physicians were primary-care physicians, you could scarcely get one in a thousand to answer in the affirmative. Patients don't like the current healthcare system either, and their frustration often adds to ours as they assume we are part of the problem.

In light of this, it's not hard to see why many physicians, including myself, have fantasized about leaving it all behind and trying something new. Last September, after realizing my partners no longer shared my core values of patient care, I decided to not only leave my practice, but to leave the entire fee-for-service system behind and strike out on a totally different course. Having seen the demands of Medicare-driven documentation, meaningful-use compliance, and managed-care bureaucracy swallow up my time for actual patient care, I refused to play that game anymore. I had to do something different.

My choice: direct care

After weighing various options, I chose what is now being called a direct-care practice. Direct care refers to what is essentially a low-cost concierge type of practice, where patients pay a monthly retainer fee for access to care and services. Some practices charge a copay for office visits, but I opted to rely solely on the monthly payment (ranging from $30 to $60 per month) for income. I wanted to keep care accessible for the average person, not cater to a wealthy clientele.

Patients pay me a monthly fee: They have the option of using their employers' flex spending or HSA accounts. For that retainer fee, they receive complete care, except certain lab work or imaging studies which can be billed to patients' insurance by outside facilities. I do not charge for office visits, so the monthly retainer fee is my sole income.

Private insurance covers none of my services, as carriers do not recognize a monthly fee as a covered service. Therefore, with the exception of outside labs or imaging, my practice is completely independent from insurance payers.

Several factors made this practice type a viable alternative for me:

1. I could reduce the size of my patient panel. I am currently at 200 patients after being open for two months, but hope to grow my practice to 1000 patients, total. I had more than 3,000 active patients in my previous practice.

2. Freed from the need to have a busy office to pay the bills, I can be creative in offering care. I can go old school and do house calls, or can use video conferencing, secure messaging, or phone calls to give care.

3. Without the burden of billing and collections, my overhead is ridiculously low, and I have been able to generate a positive cash flow for the first two months I've been open.

Opting out of Medicare

To practice freely in this model, I was faced with a difficult decision. "What should I do about Medicare?" Accepting it — even as a nonparticipating provider — would expose me to the ever-present risk of being accused of Medicare fraud. The complexity of the rules and regulation surrounding Medicare are so complex, that I've never felt safe participating as a provider, despite the fact that I did everything I could to comply with the laws. Most docs share my belief that if an auditor wanted to find noncompliance in any physician's practice, they can. The laws are simply too difficult to follow to the letter.

Since accepting Medicare would greatly increase the complexity of managing my new practice, not to mention increasing overhead, I felt I was left with only one option: to opt-out of Medicare. This decision isn't easy because it requires a commitment on the provider's part to defer billing Medicare for services for two years. It also severely limits the opportunities to earn money on the side through moonlighting. Perhaps I could've continued to participate with Medicare through legal gyrations, but I felt the safest alternative was to opt out — which I did.

Many of my patients who followed me to my new practice do have Medicare, but opting out has definitely scared off others. Many don't understand that Medicare will still pay for labs and tests that I order, and others simply don't want to pay an additional fee for medical care that is covered by their insurance.

The hard part

When considering a direct-care practice, I felt the simplicity of the model would allow a smooth transition to a better life for both me and my patients. But there is a reason why more physicians aren't doing what I am doing by striking out on their own: It is really, really hard. Here are the things I've found most challenging:

• Construction. After finding an office in a good location I set about making it fit my needs. I was lucky to hook up with a contractor who guided me through this process and took much of the heat when things didn't work out as planned. Still, the construction took a month longer than expected and cost twice what I had hoped.

• Computers. Unfortunately, current medical record systems have become tools to achieve "meaningful use" and to comply with E&M codes so docs can get paid. Despite my previous success with EHRs, I found very little in these products that addressed mytwo top priorities: communication and patient care. While I've found many parts of the solution I seek, they remain separate pieces, dividing the record, and making care more difficult for me and more confusing for my patients.

My conclusion

Since I am presently in the eye of the storm, I am not going to give any sweeping words of wisdom. But here is what I can say from my own experience:

• It has been much harder than expected. Perhaps I was just naïve, but I had no idea how difficult it would be.

• My patients are thrilled. They love the open communication I offer.

• There are huge opportunities out there. Despite how hard the present is, I think my future is bright. I'll cover that in my next article.

Robert Lamberts, MD, who is board-certified in internal medicine and pediatrics, practices in Augusta, Ga. In October, 2012, he left his "traditional" primary-care practice and opened a cash-only "direct care" practice. His writings on this and other topics can be read on his popular blog, "Musings of a Distractible Mind" http://more-distractible.org. Dr. Lamberts can be reached at [email protected].